Solomon Systech Announces 2019 Interim Results
Revenue Increased 24% Year-on-Year to US$56.6 Million
Highlights:
- Total revenue up around 24% to US$56.6 million.
- Total unit shipments increased approximately 12% to 162.6 million units.
- Gross profit was US$10.0 million. Gross margin was 17.6%.
- Some bright spots for growth in 2H 2019 despite uncertain market outlook.
(Hong Kong – 21 August 2019) – Solomon Systech (International) Limited (“Solomon Systech” or “the Group”; SEHK: 2878) announced today its 2019 interim results for the six months ended 30 June 2019 (“1H 2019”). The Group’s total revenue and unit shipments both recorded double-digit growth year-on-year despite challenging market conditions. The Group’s total revenue increased by around 24% to US$56.6 million, while total shipments increased by approximately 12% to 162.6 million units. Gross profit was US$10.0 million while gross margin was 17.6%. Book-to-bill ratio for the period under review was 1.1.
A net loss of US$9.6 million was recorded, attributed mainly to specific provisions made for slow moving inventories, and decrease in net finance income.
Business Review
The Advanced Display (“AD”) products, which include PMOLED display and OLED lighting products, as well as bistable products, micro-/mini-LED products and custom ICs, registered a decrease in total shipments by approximately 37% year-on-year to around 66.7 million units, and a change in the product mix, mainly due to dampened market demand for wearables and other key applications of PMOLED display driver ICs under the volatile global economic climate.
Nonetheless, the Group has managed to maintain business with some top-tier wearable brands, and garnered design-in projects for smart home appliances which are prospering in the era of the artificial intelligence of things (“AIoT”). The Group’s innovative PMOLED Touch and Display Driver Integration (“TDDI”) IC has also started design-in activities during the review period.
The Group has been promoting its new bistable display driver IC for larger-size ESL panels of 7 inches to 13 inches. It has also achieved design wins for new products supporting smaller-size bistable display panels of 1 inch to 2 inches with higher DPI targeting electronic shelf labels (“ESLs”) for convenience stores. The Group’s custom display driver IC for micro-LED panels was adopted by premier shopping malls for signage displays.
The Large Display (“LD”) products, which include large panel TFT LCD display driver ICs for TVs, monitors and other applications, witnessed strong year-on-year growth in unit shipments of around 476% to approximately 67.9 million units.
The Group has increased its business in Nanjing, and also leveraged its new customers in Chengdu and Xianyang to further boost its LD product shipment and revenue growth. It has garnered design wins covering gaming monitors, Full HD monitors, and TV of various sizes and resolutions.
The other products of the Group, including Mobile Touch (“MT”) products covering AMOLED and LCD touch controller ICs, and Mobile Display (“MD”) products spanning from In-Cell TDDI ICs, TFT LCD display driver ICs to MIPI bridge ICs, recorded a slight increase in unit shipments of around 4% year-on-year to around 28.0 million units. The Group has successfully designed-in its AMOLED touchscreen controller ICs for foldable/flexible smartphones with a key module manufacturer in the PRC, enhancing the possibility of reaching out to more top-tier smartphone customers. The Group’s MD business was boosted in the second quarter of 2019 by the mass production of both custom-made In-Cell TDDI IC for Full HD+ (1080 x 2160) LTPS panels and MIPI bridge ICs.
Prospects
Looking forward, for AD products, the Group’s PMOLED TDDI IC is anticipated to start mass production by the end of 2019 and contribute to the revenue stream. The PMOLED display driver ICs for wireless bluetooth speakers and other smart home appliances target to start mass production by end of 2019. The Group’s new bistable display driver IC targeting ESL applications at convenience stores is expected to continue generating revenue. The Group will continue to work with market leading micro-LED panel manufacturers to develop more new ICs for this next generation technology.
The Group’s LD business is set to continue its strong growth momentum in the second half of 2019, and its new P2P display driver IC for the high-end 120Hz UHD TV and 8K TV markets is also expected to start mass production in the second half of 2019.
Raymond Wang, Acting Chief Executive Officer of Solomon Systech, said, “Our strategic measures to boost business growth, minimize operating expenses, and optimize operating margins, are beginning to yield some results starting from the second quarter of the year. Although uncertain market outlook may continue to weigh on the Group’s business, we shall capitalize on some positive spots to drive growth, including large display business which is expected to continue its strong growth momentum, and applications with strong growth potential – smart home appliances, electronic shelf labels at convenience stores, etc. Our new products and technologies to be launched and in the pipeline, including micro-led display driver ICs, will also help to drive future growth”.
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